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Insight: swing states: could europe decide the u.s. election? by ferujkll sdff
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Insight: swing states: could europe decide the u.s. election? |
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Business,Business News,Business Opportunities
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As workers assemble the family-owned company's hot-air fabricwelders, used to manufacture everything from inflatable rafts totruck tarps, it's hard to know the recession of 2007-2009 everhappened. Ten clocks on the wall of the plant in Navarre, Ohio, show localtime from Norway to New Zealand and tell Miller Weldmaster'scomeback story in a word: exports. Sixty percent of the company'sbusiness now comes from outside the United States. Manufacturing growth, surging exports: These are central promisesof Obama's reelection bid, especially in blue-collar industrialstates that could determine the election. Mindful of the Indiana surprise of 2008, when a spike inunemployment helped Obama win the reliably Republican state, theWhite House has every reason to fear payback in states like Ohio,this time from any deepening of Europe's financial crisis.
Already there are warning signs. One in four of Miller Weldmaster'smachines is sold in Europe, and sales are down 5 percent so farthis year. A further drop could force the company to considerlayoffs. "We've taken a sigh of relief - we've been over the crunch," saysJeff Sponseller, the company's vice president of sales andmarketing.
"The chance that this could happen again brings a lot ofanxiety." Other Ohio manufacturers share that concern. Royal PhillipsElectronics, which exports X-ray machines from a 1,200-employeefacility near Cleveland, warned in April that budget cuts and otherausterity measures in Europe could hurt demand for its products.Glassmaker Owens-Illinois Inc, based in Perrysburg, said Europe'svolatility could hit its earnings as well. The U.S. Commerce Department estimates that more than a quarter ofall manufacturing workers in Ohio depend on exports for their jobs. Against this backdrop, the Obama administration has been involvedin intense, behind-the-scenes maneuvering to steer Europe away fromthe financial brink.
For the past two years, Treasury officials, including TreasurySecretary Timothy Geithner, have crisscrossed the Atlantic inpursuit of solutions to Europe's problems. The president has alsobeen actively involved, speaking to European leaders by phone atkey moments in the region's crisis. His instant invitation to France's newly elected president,Francois Hollande, to White House talks on the eve of thisweekend's Group of Eight summit is evidence of a central fact inthe United States: The states that will do most to determine theoutcome of November's presidential and congressional elections maynot be swing states like Ohio but member states of the EuropeanUnion. On condition of anonymity, a senior EU official told Reuters itfelt as if the Obama administration wanted the G8 to cooperate inthe reelection campaign.
"They see the debt crisis as the biggestlikely drag on the U.S. economy between now and November," theofficial said, "and so they basically want to make sure that wefind a way of muddling through." FRANTIC SHUTTLE DIPLOMACY U.S. officials say Europe's woes are already weighing on the U.S.economy, which grew at a tepid 2.2 percent in the first quarter of2012. Rather than a hit to exports, the real nightmare scenario for U.S.businesses, banks and policymakers alike would be a chaoticunraveling of the euro zone's financial system on the scale of thecrash that followed the failure of U.S. investment bank LehmanBrothers in 2008.
Then, banks in the United States and beyond were pushed to theverge of collapse by a seizing up of credit, strangling the globaleconomy and more than halving the value of U.S. and global stockmarkets. The psychological impact demolished consumer confidence aswell as the economic track record of the Republican administration,helping hand an historic election victory to Obama. For the sake of the U.S. economy and the election that no doubthangs on it, the White House has no wish for history to repeatitself.
Late last year, as U.S. and European officials alike worried theentire single European currency area might fall apart, TreasurySecretary Timothy Geithner embarked on a frantic round of shuttlediplomacy. Between September and December he flew to Europe five times,sometimes passing through several capitals in a day. Those directlyinvolved say conversations with senior policymakers were oftenblisteringly blunt.
Officials say the strategy has been clear: to explain what is atstake for the global economy, to offer up lessons from how theUnited States moved to fix its banks, and to push Europe to dowhatever is necessary to hold itself together. Geithner in April made a fresh call on the European Central Bank,which has been less aggressive than the U.S. Federal Reserve, tohelp alleviate the crisis. Even when Europe's worries eased in the first few months of 2012,U.S.
officials continued talking to their European counterparts onan almost weekly basis. "We've been heavily and steadily engaged with them from theoutset," Under Secretary to the Treasury for International AffairsLael Brainard told Reuters. "It's too important for our exportersand our workers not to be." Brainard, the lead U.S. official on the issue, is already planningher next trip to Europe.
It will be her ninth since September. HOW PERSUASIVE A PRESSURE? When U.S. officials first raised serious worries over the potentialsurvivability of the euro zone at a meeting of finance ministersfrom the G7 advanced economies in Canada's frozen north in February2010, they say European leaders simply did not grasp the potentialscale or impact of the crisis. Amid the igloos and the dogsleds - and questions over why Canadadecided to host the event in such a costly and inaccessiblelocation - they outlined their fears of a potential new crisis. Since then, they complain, euro zone leaders have struggled timeand again to get ahead of events, only to settle on measures thatwould be too little, too late.
Officials from both sides of the Atlantic with knowledge of thesediscussions say that even those agreements came after last-minuteU.S. pressure, often culminating in direct intervention by Geithnerand Obama himself. Without such pressure, these sources say, the May 2010 meeting inBrussels, which agreed on the first 110 billion-euro bailout forGreece, might never have reached that conclusion. U.S. officials say they were also instrumental in persuading Europeto perform much stricter stress tests on its banks.
Without the personal intervention of Obama, one Washington insidersuggested, former Spanish Prime Minister Jose Luis RodriguezZapatero might never have accepted that his troubled economy couldno longer sustain its economic stimulus and needed to confront itsbudget deficit. Not everyone in Europe agrees that European policy owed quite somuch to U.S. pressure. Much of what Washington wanted, theysuggest, was already in the works.
"In terms of the conversations, I think they were effective," saidone well-placed European diplomat on condition of anonymity. "Buteveryone was already aware of the need to address these issues.They were pushing at an open door." PRESIDENTIAL TOUCH The next European leader to get Obama's personal attention will beFrancois Hollande. When Obama phoned him to congratulate him on hiselection victory on May 8, Hollande found himself invited to theWhite House much sooner than he or French officials had planned. Given Hollande will be attending the meeting of G8 leaders thisweekend and a NATO summit that immediately follows, his meetingwith Obama on Friday has a practical logic. But analysts andofficials say there is little doubt the U.S.
president will use theopportunity to try to build rapport and stress again the importanceof European cohesion. During his campaign, Hollande sharply criticized German ChancellorAngela Merkel for her focus on austerity to solve the debt crisis.Yet on Tuesday, in a visit to Berlin hours after his inauguration,the two leaders agreed to a joint approach even as theyacknowledged their differences. On the timing of Hollande's visit to Washington, "obviously, thereis an element of convenience here," said Philip J. Crowley, aformer State Department spokesman under the Obama administration."But there is also a sense of urgency.
European decisions couldpotentially intrude on the U.S. election." Hollande's "pro-growth" agenda is more aligned with the Obamaadministration's own stimulus spending than that of hispredecessor, Nicolas Sarkozy, who supported the German-led "fiscalpact" that ties euro zone members to tough spending rules. Yet theUnited States is anxious that Hollande soften his election pledgeto renegotiate the pact, potentially jeopardizing the rest of ameticulously negotiated crisis plan. Finding a compromise between the focus of Paris on growth andBerlin's insistence on austerity could be easy when compared withthe far more difficult decisions that confront Europe.
Greece faces elections in June that could determine its chances ofstaying in the euro zone. Should it leave, fears will intensifythat other countries could follow suit. If Germany wants topreserve the euro, it may have to decide how deeply to underwritethe more troubled Mediterranean states. "We have much less influence over Germany, where policy is drivenby domestic politics," said Tyson Barker, a Europe specialist andfellow at the Truman National Security Project who says he talks toadministration officials most days. "In Greece, which itself mightbe on the edge of political collapse, I'd say we have no influenceat all." REPUBLICANS READY TO POUNCE At home, Obama's hands are largely tied.
Any new U.S. funding to the International Monetary Fund, whichcould be used to help fight the euro zone crisis, is considered anonstarter: With many voters still simmering over the 2008 WallStreet bailout, more U.S. funding for Europe would play straightinto Republican hands. Republicans have tried to revoke $100 billion in previouslyauthorized IMF emergency funding. Although the measure was defeatedin the Democratic-controlled Senate, party leaders could stillgenerate awkward headlines for Obama by pushing it in the House ofRepresentatives.
"We haven't seen a willingness by the European Union countries tochange their addiction to government spending and borrowing," saysRepublican Representative Cathy McMorris Rogers, who is leadingthat effort. "It doesn't make sense to be funneling billions ofdollars to bail out Greece, Portugal, Ireland, and other wealthyEuropean countries." Advisers to Mitt Romney, Obama's most likely challenger inNovember, argue that Obama's poor stewardship of the U.S. economyhas left the United States exposed to the euro zone crisis andlimited the administration's ability to respond. "We think the Obama administration has limited credibility inEurope because they so badly mismanaged our economy here," saidKristen Silverberg, a former ambassador to the EU who advises theRomney campaign on European policy. In reply, Obama's defenders argue that the recession in severalEuropean countries provides proof that his aggressive stimuluseffort saved the United States from a deeper slump.
"When President Obama says, 'Look, we stabilized the financialsystem, we put in stimulus and the economy walked back from thebrink of collapse' ... it's very hard to do the counterfactual. Butnow, Europe is the counterfactual," said Laura D'Andrea Tyson, aformer economic adviser to President Bill Clinton who also servedon Obama's jobs council. Some say that argument will be too complicated to make on thecampaign trail. "Most voters aren't thinking about any of this," said Paul Krugman,the Nobel Prize-winning economist who wants further big stimulusspending in the United States.
"Voters have children, they havelives, they have jobs. They're not interested in this stuff exceptinsofar as they want to know if the economy's getting better." RECOVERY AT RISK Back in Ohio, jobs are easier to find than they were a year ago.The state's unemployment rate, at 7.5 percent, is at its lowestpoint since before Obama took office. Miller Weldmaster is hiring electricians and welders, and anatural-gas boom is luring some workers away with the promise ofsix-figure incomes. Still, memories of the recession are vivid, and the company isredoubling its marketing efforts to keep the gathering storm inEurope from eroding its sales further.
"When things get slow, the first thing that goes off people's listis capital equipment," Sponseller says. The political fallout fromsuch a downturn, as John McCain discovered in Indiana four yearsago, can make all the difference. The electoral calculus for the 2012 campaign is brutallystraightforward. "In good times incumbents are rewarded," saysDavid Cohen, a political science professor at Ohio's University ofAkron.
"In bad economic times incumbents are punished." (Editing by William Schomberg and Prudence Crowther). I am an expert from Bag Making Machinery, usually analyzes all kind of industries situation, such as folding screen divider , folding shoji screen.
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